The impact of the New Economy on the American standard of living is mixed. Per capita GDP and productivity growth rates have declined steadily since the 1960s. Low productivity gains are in turn the main factor explaining sluggish income growth, especially among non-college educated workers who are not qualified for the high-skill jobs where wages are rising rapidly. Even workers whose wages are going up steadily are experiencing less job stability and receiving fewer non-wage benefits.

The New Economy Index focuses special attention on measuring our progress towards taking steps that could accelerate economic growth while spreading its blessings more widely throughout the U.S. population.

It shows that the "digital economy" is growing rapidly with households, schools, and businesses quickly gaining access to the Internet and other on-line services, but with government lagging significantly behind. "E-commerce" -- the on-line conduct of business, including sales of goods and services -- is beginning to take off, with huge implications for the U.S. economy and American lifestyles.

The report raises an alarm about the sharp reductions in federal government expenditures on basic and applied research and development -- a big part of the origins of the Information Technology revolution -- during the 1990s.

It also demonstrates that despite widespread understanding of the need for a better trained and educated workforce in the New Economy. Corporate expenditures on worker training are actually declining somewhat, and are centered on top-tier employees, while sharply increased public spending on schools have not produced significant improvements in K-12 educational performance.

Given the role of the public sector in creating economic policies that sustain economic growth, and more specifically, in helping finance both basic research and education and training, The New Economy Index stresses the need for genuine public-private cooperation in enhancing the potential of the New Economy to serve the national interest. Appropriately, the report was unveiled on November 18 at the inaugural meeting of PPI's New Economy Task Force, a high-level group of elected officials and entrepreneurs co-chaired by Senate Minority Leader Tom Daschle (D-SD) and Gateway chief executive officer Ted Waitt. (Co-hosting the event with Sen. Daschle was communications pioneer Mark Warner, who also chairs PPI's Project on Technology, Innovation, and the New Economy).

The event drew 12 members of Congress, 17 high-tech entrepreneurs, and extensive media coverage. Many of the reporters present contrasted the PPI event with a conference sponsored by the libertarian conservative Cato Institute this weekend billed as "Washington vs. Silicon Valley." The kind of friendly, cooperative spirit of public-private partnership envisioned by Cato is suggested by the title of the conference's first panel: "Why Silicon Valley Should Not Normalize Its Relations With Washington." PPI's event reinforced the natural affinity between the high-tech community and New Democrats.

Both public and private leaders at the PPI event stressed their mutual need for better understanding of the high-tech community in Washington, and better understanding of the political and legislative process among high-tech entrepreneurs. But the event, like The New Economy Index, also reflected an awareness that the positive blessings of the New Economy can only be realized if technological improvements spread outside high-tech companies into sectors of the economy that could benefit from improved productivity and the higher wages it makes possible. In remarks prepared for the November 18 event, PPI's Atkinson summed up the implications for public policy:

We tend to think of technological and economic change as creating "winners" and "losers." Some people on the Right think we should celebrate the "winners" and leave the economy alone. Some people on the Left think we should slow down change so that the "losers" can catch up. It is absolutely crucial we understand that only by accelerating change and spreading the use of information technologies more widely can we achieve the productivity gains that will raise wages and incomes for those so far "left behind" in the New Economy. Getting access to the technological tools of the New Economy -- and getting the education and skills to use them -- is the best way to help Americans produce more and earn more. That is why PPI supports a two-pronged strategy for "expanding the winner's circle" -- public support for policies that will encourage the continued transformation and "digitization" of the U.S. economy, and for the education and training that will ensure we all benefit.

Publication of The New Economy Index is intended to spur a new and much better informed debate on economic change and how to shape it as a vehicle for growth, upward mobility, and U.S. international leadership. It's a unique resource for anyone who wants to talk or think about the New Economy, and it is required reading for New Democrats.